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Generation expansion planning procedure

Short answer

Generation expansion planning selects the type, size, timing and location of new plants to meet forecast demand at minimum total cost and required reliability. The procedure runs from load forecasting, existing plant data, candidate plants, reliability criteria, and alternative formation through production simulation, present-value economic comparison, and sensitivity analysis to the least-cost plan.

Discuss briefly the Generation expansion planning procedure.

Generation expansion planning (GEP) decides what type of generating plants, of what size, should be added when and where, so that the forecast demand is met at minimum total cost (investment + operation) with the required reliability.

Procedure

 Load forecast (peak MW, energy GWh)
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 Existing system data & retirements
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 Candidate plants (hydro, solar, thermal..)
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 Reliability criteria (LOLP, reserve)
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 Generate expansion alternatives
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 Production costing / simulation
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 Economic evaluation (PV of cost)
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 Sensitivity & risk analysis
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 Least-cost expansion plan
  1. Load forecasting: Forecast yearly peak demand (MW) and energy (GWh) for 10–25 years, with high, base and low scenarios.
  2. Existing system: List present plants with capacity, firm energy, availability, operating cost and retirement dates.
  3. Candidate projects: Identify possible new plants (ROR, storage, pumped storage, solar, thermal, import) with their capital cost, O&M cost, construction time, capacity factor and seasonal output.
  4. Reliability criteria: Set a target such as Loss of Load Probability (e.g. LOLP ≤ 1 day/year), Loss of Energy Expectation, or a reserve margin (e.g. 15–20%).
  5. Form alternatives: Build different sequences of plant additions that meet demand year by year.
  6. Production simulation: For each plan, simulate dispatch (merit order, hydrology, maintenance) to get fuel/operating cost, energy spill and reliability.
  7. Economic comparison: Find present value of total cost (capital + O&M + fuel + cost of unserved energy) using a discount rate (e.g. 10–12%). Tools: WASP, PLEXOS, dynamic programming.
  8. Sensitivity analysis: Check the plan for changes in demand growth, fuel price, discount rate, hydrology and delays.
  9. Final plan: Select the least-cost plan meeting reliability, environmental and policy limits; coordinate it with transmission expansion planning; review every 1–2 years.

Example: NEA's plan balances ROR plants (cheap but low dry-season output) with storage projects like Tanahu to meet the winter evening peak.

✓ Answer checked by Claude Opus 5.5 (high effort)

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